View full sizeDoug Beghtel/ The OregonianSoloPower Chief Executive Officer Tim Harris said it was an easy decision to bring the new production plant to Wilsonville because of Oregon's business friendly environment, excellent support programs and highly skilled work force.

Here's a sweet deal. A company can put up a $55 million solar factory in Oregon for just $13 million.

Except that you, the taxpayer, get to provide the $42 million difference in tax breaks and loans, while private investors pocket the returns.

Critics say SoloPower Inc., a Silicon Valley startup, is getting that deal in Wilsonville as state, county and city governments support a solar plant to the tune of more than $129,000 a job. Oregon outbid other states for the plant, which will employ 170 during its first phase making thin-film solar panels in a leased warehouse.

With only $13 million invested in debt and equity, what's to stop SoloPower from walking away in a couple of years and relocating to, say, China -- as manufacturer Evergreen Solar is doing, laying off 800 after Massachusetts committed $43 million in subsidies?

Oregon officials respond that they have safeguards in place. They say SoloPower's equity in the Wilsonville project is actually more like $20 million. Tim Harris, SoloPower chief executive, says his company's investment in training and the advanced nature of thin-film technology, which is not easily transferred to China, will anchor manufacturing in Wilsonville.

"We're spending on the order of $10 million just to facilitize the building," Harris said. "That's not something one would walk away from lightly."

As federal, state and local governments help develop Oregon into a solar industry hub, taxpayers are becoming venture capitalists, risking money on companies advancing new technologies. Taxpayers don't stand to get cash returns as investors do, but Oregon does get jobs -- ultimately 500 in Wilsonville, if a U.S. Energy Department loan guarantee for as much as $192 million comes through for SoloPower to expand.

Oregon energy and economic-development officials say solar factories and support industries will pay returns for years to come. In Wilsonville, where city councilors plan to discuss proposed SoloPower subsidies at 5 p.m. Thursday in City Hall, a former Nike distribution center is expected to become a busy factory producing thin-film sheets, a new flexible alternative to rigid solar panels.

Tax activists are incensed. Jody Wiser, who chairs watchdog group Tax Fairness Oregon, says SoloPower could leave behind its Oregon investment quite easily. After all, she notes, the company parted with $19.9 million last year for two co-founders who had sued the company after being ousted.

"It's outrageous that we're taking on 70-some percent of the risk for a company that will have no reason to stay here if they can find a better place to go," Wiser said. "Like Evergreen, who after two years left Massachusetts, this company is very apt to do that."

SoloPower Inc.

Founded: 2005

Chief executive: Tim Harris

Headquarters: San Jose, Calif.

Employees: 127

Product: Flexible thin-film solar panels that can be applied to roofs and other surfaces

Financing: Four rounds completed, for $10 million, $30 million, $48 million and $52 million

Subsidies, first phase: $20 million state tax credit, $20 million state loan, initial $2 million property-tax abatement. Applying for federal loan guarantee of as much as $192 million

Factory wages: Undisclosed

Under SoloPower's emerging deal, the company is expected to receive a $20 million tax credit through Oregon's Business Energy Tax Credit program, plus a $2 million property-tax abatement from the city of Wilsonville. Divide that $22 million by 170 employees and get more than $129,000 a job -- a tidy sum, but less than the $225,000 a job Sanyo Solar stood to receive when it built a Salem plant in 2009 that now employs about 200, as promised.

The state will lend SoloPower an additional $20 million. Thus a total $42 million of SoloPower's $55 million first phase will be government-funded, leaving SoloPower to put up $13 million.

But Tim McCabe, director of the Oregon Business Development Department, said the business-energy tax credit is likely worth only about $13 million to SoloPower, not the full $20 million face value, depending how the company exercises it. Therefore SoloPower's equity in the first phase is more like $20 million, McCabe said.

"I still think $20 million is a lot to walk away from," said McCabe, adding the company also must pay back the state's $20 million loan. That loan is secured by factory equipment, and the company must meet benchmarks before receiving it, said Paul Zollner, loan manager for Oregon's small-scale energy loan program.

McCabe said his agency thoroughly checks backgrounds of manufacturers seeking tax credits, although he hadn't heard of the payouts to settle the co-founders' suit. A company receiving a business-energy tax credit signs a contract with the state, he said, specifying the number of jobs it will provide and their salaries.

"We're not just handing them money," McCabe said. "That's the misconception that's out there. And if they don't fulfill that contract, they have to pay us back the whole amount."

The business-energy tax-credit contracts range from two to five years, McCabe said.

"We haven't had anybody walk away yet," McCabe said of the manufacturers his agency recruits and supports. "If they're going to hire 500 people and manufacture two to five years, I'm pretty confident we're getting our money back. This is a valuable incentive and we do everything we can to protect it."

Wiser sees the equation differently, starting with the state loan collateral. "Their equipment will be worthless to the state if they leave," she said. "That is hardly a great guarantee for the loan."

If SoloPower expands as planned, Wilsonville city council members are prepared to provide a second $2 million tax abatement. Clackamas County will share the risk, pledging to reimburse the city as much as $1 million for each tax break if SoloPower departs before Wilsonville recoups either of the abatements.

City officials plan to provide the abatements by doing something they believe to be unprecedented in Oregon: declaring a single property, the former Nike site, an urban renewal district. They will capture the increased tax revenues from the improved building to reimburse the city for the two $2 million tax breaks over about 10 years. The city will still collect taxes for fire protection and schools.

Wiser perceives irony in the urban classification, given that part of the state loan will be guaranteed by the U.S. Agriculture Department in a program to improve conditions in rural communities. "So it's going to be an urban renewal district giving a loan for a rural area," Wiser said.

Wiser says state legislators may file a bill this session that would give taxpayers an equity stake in companies that receive state subsidies, so Oregonians would get a return -- beyond just jobs -- on successful investments.

Harris, of SoloPower, described the company's emerging deal as a winning partnership to produce a beneficial product. "It's very clean technology for a socially useful function," he said.

SoloPower has raised $140 million of private investment in four financing rounds, Harris said. If the U.S. Energy Department loan guarantee comes through, he said, the company will get private matching dollars.

SoloPower will make 1-by-3-meter panels capable of generating 260 watts, Harris said. The point is to expand the plant as quickly as possible to achieve economies of scale, he said, driving manufacturing costs below $1 a watt. Execs have told analysts they hope to hit 70 cents a watt.

Harris said he had no salary figures yet for plant workers. Employees will operate and maintain equipment as sophisticated as tools used in a semiconductor wafer fab, he said.